Military Spending – From Cold War To War On Terror, Watch How America Outspends Everyone

Military Spending – From Cold War To War On Terror, Watch How America Outspends Everyone by HowMuch.net

Take a snapshot of the world’s military spending in 1990 and compare it to last year’s global expenditure on soldiers and weaponry. At first glance, not that much seems to have changed. America remains by far the world’s dominant military power. Back in 1990, the U.S. spent $554.7 billion on defense, or 37.1% of the world’s total. In 2015, America forked out $595.5 billion for its military, 34.5% or the global war budget.

So, America’s defense spending has increased, but not by as much as the global total. But as this graph shows, that is only a small part of the story. The world has radically changed in the two and a half decades since 1990: the Communist threat has collapsed, but talk of a so-called peace dividend evaporated with the emergence of a new, more elusive enemy after 9/11. Meanwhile, the world’s changing economic fortunes have also changed the military parameters: China has taken over from the USSR as America’s main challenger.

Or to put it in a different way: NATO, the Euro-American military alliance set up to counteract the Soviet-dominated Warsaw Pact, had its brief moment of near-total hegemony. In 1990, the U.S. and its NATO allies spent just under 60% of the world’s total military budget. The sudden vacuum left by the communist collapse meant that a year later the (then) 16 NATO member states were responsible for a whopping 71.2% of the entire world’s defense spending.

Globally speaking, the end of the Cold War really did result in a peace dividend. In 1990, with the Soviet Union crumbling but still alive, worldwide military spending stood at $1.49 trillion. The next year, it took a sharp dive, to $1,15 trillion and kept falling, to $1.06 trillion in 1996. For a moment, it must have seemed like the swords-into-ploughshares moment promised by the Bible was arriving.

But 1996 was the low point; after that – well before 9/11 – global military expenditure crept up again; although the pace was quickened by the Global War on Terror from 2001 onwards. By 2006, military spending had reached 1990 levels again, rising to as much as $1.77 trillion from 2010 to 2012. Recent spending is down again, to $1.73, reflecting America’s disengagement from its costly wars in Iraq and Afghanistan.

For America’s dominance is the one constant of global military spending over the past 25 years. In 1990, the U.S. spent as much on defense as the six next biggest spenders (in descending order of magnitude: the USSR, Germany, France, the UK, Japan and Italy). Even though it slashed its defense budget to $515 billion in 1992, its share of global expenditure grew to a whopping 42.5% – due to the collapse of the Communist war machine (Soviet/Russian spend dropped from $269.5 billion to a mere $57.6 billion in 1992).

The U.S. maintained a +40% share of global military spend until 1995, when it started dropping to as little as 36.1% in 2001 (or $418.1 billion in absolute figures). That, of course, is the year when the world changed again. America’s war machine kicked into higher gear. The invasions of Afghanistan and Iraq loomed on the horizon.

Here’s how much that cost: U.S. defense spending rose sharply, hitting $534.3 billion in 2003 (again breaking the global 40% barrier), reaching a high point of $757.9 billion in 2010, or 42.7% of the world’s total – two records. America’s disengagement from both Iraq and Afghanistan brought down the total to the 2015 figures quoted above.

But the world is wider – and more dangerous – than just the Middle East. While America focused on fighting the jihadi threat, China has been methodically expanding its military capacity. Outspending Spain by a mere $2 billion, China’s $22 billion military spend in 1990, 1.47% of the world’s total, barely made it into the Top 10. Unencumbered by foreign conflict, and fuelled by its economic success, the People’s Republic almost doubled its spend to just under $40 billion by 1999, placing it in 8th position worldwide, at 3.64% of global expenditure – but still just behind Italy. By 2005, China’s spend had almost doubled again, to just under $80 billion. Still just 5.5% of global war budget, but already second only to the U.S.

The gap between #1 and #2 back then was still a yawning $530 billion, but with America’s defense budget shrinking of late, and China’s continuing to expand, that gap is closing. China’s defense budget for 2015 was twice and a half the size of a decade earlier; at $214.7 billion, it is now 12.37% of the global total, and more than a third of the American defense budget. China’s defense budget last year does the same trick as America’s: it is as big as several of the next ones put together – in 2015: Russia, Saudi Arabia and France.

China’s inexorable rise and its military muscle-flexing, especially in the South China Sea, is making some of its neighbors nervous, and is producing some strange news headlines. President Obama, on a recent state visit to Vietnam, lifted the arms embargo against America’s erstwhile archenemy. So in all likelihood, Vietnam’s defense spending will go up from the $4.6 billion it spent last year; but not as much as China’s, which in next year’s ranking will probably have a military budget that is greater than even more countries next on the list – and yet another bit closer to America’s grand total for defense spending.

Meanwhile, NATO’s total military spend is starting to shrink. Buoyed by the War on Terror and by NATO enlargement (often with former Warsaw Pact members), the Alliance maintained a mid-sixties percentage of global military budget until 2012, when it fell below 1990 levels. NATO’s share has continued to fall precipitously, from 58% to 52% in 2015. With most member failing to live up to their commitment to spend 2% of their GDP on defense, it is likely that, from this year onwards and for the first time in many decades, the rest of the world will spend more on the military than NATO.

Military Spending

Author: Sheeraz RazaSheeraz is our COO (Chief - Operations), his primary duty is curating and editing of ValueWalk. He is main reason behind the rapid growth of the business.
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